It’s been a fairly uneventful week for gold traders. The market drifted gradually lower, but failed to find any real momentum.
The resilience of the US dollar is having a dampening impact on gold, with traders keeping the greenback bid for now.
At the January FOMC this week, the Fed did little to dissuade traders from holding dollar long positions.
While the Fed acknowledged that the economy has gone south in recent months, it maintained the view that it is due to recover over the second half of the year.
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Though the Fed stopped short of any tapering talk, there was certainly no signal that any further easing will be forthcoming as the Fed awaits the next round of US fiscal stimulus.
In light of this, there is the scope for the dollar to continue higher in the near term. And this is likely to keep gold prices under pressure.
It is worth keeping an eye on equities markets here, however.
We have seen a little bit of a wobble this week with the S&P tumbling midweek. If equities do start to correct lower, this could help underpin gold prices.
However, again, for now, the market looks likely to continue to trade without much conviction given the lack of drivers.
Gold Holding At Support
Gold prices continue to hold back within the bearish channel following the sell-off from 2021 highs earlier in the month. For now, the 1826.71 level continues to provide support.
However, there is little buying action currently. The market looks vulnerable to a drop lower which would turn focus to the 1764.18 level next.
Silver prices have had a much better week than their gold counterpart.
In fact, the market rallied on Thursday. The driver behind the move was the “Reddit crowd” which has gripped the headlines this week.
A group of traders on the social media platform have been banding together to target ailing stocks under pressure from short-sellers. On Thursday, the group turned its attention to silver in an attempt to drive it higher.
Silver prices jumped a full dollar within the first 45 minutes of Thursday’s US session in response to the Reddit Crowd’s action in combination with other speculative traders.
Silver Spikes Higher
Silver prices spiked higher this week with price briefly piercing above the 25.97 resistance.
Above there, the market is open to a run back up towards the 29.08 level resistance. Silver prices have been fairly stagnant aside from Thursday’s move with price remaining range-bound between the 25.52 and 25.97 levels.